Ch. 1-3 Flashcards
1
Q
FV =
A
principal + interest
C1 (1 + r)
2
Q
NPV steps
A
- PV of future cash flows
- NPV = PV of future flows - required investment
3
Q
PV
A
C1/1+r
4
Q
declining discount factors
A
1 > DF1 > DF2 > DF3 …
time value of money
absence of arbitrage (risk-less profit)
5
Q
perpetuity
A
C/r